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What is Coffee Can Investing Strategy? Here's How You Can Build Your Portfolio
There are tons of investing strategies that successful investors have developed over the years. Some are known for their complexity, some for their returns, but the Coffee Can Investing approach is known for its simplicity and returns over the years.
The coffee Can Investing term is nothing but a buy and forget approach for the longer term but systematically rather than going by your instinct. The term is widely known by a popular book named Coffee Can Investing by Saurabh Mukherjee.
Here is a detailed breakdown of the Coffee Can Investing Strategy and a list of stocks that match the approach.
What is the Meaning Of Coffee Can Investing Term?
The term "Coffee Can Investing" was first introduced in 1984 by Robert G. Kirby, a principal investment manager at the time. In those days, the people of Old West America used cans of Coffee to store important things and hide them somewhere safe, usually beneath the mattress. The term came to be is a different story, but you can observe how it resonates with Coffee Can Investing strategy.
What is Coffee Can Investing Strategy?
The Coffee Can strategy is followed by making a "Coffee Can Portfolio," in which investors diversify investments in consistently performing stocks. It is a strategy for long-term investors who can hold the stocks for at least 10 years and make a diversified portfolio by matching some conditions of the strategy. After 10 years, you will see some outperformers and some stocks which haven't moved much while your investment period but the stocks which have outperformed will provide a very high return on investments.
How To Build A Portfolio Following Coffee Can Investing Strategy?
The strategy mainly concerns the quality of the stocks, and the basics of the strategy are that you should choose quality stocks with very strong fundamentals over other trendy stocks. Below are the points investors have to keep in mind while making a Coffee Can Portfolio:
• The company should at least have existed for more than 10 years.
• The company's market capitalization should be more than 100 Crores, which will filter out penny stocks.
• The company must have revenue growth of at least 15% over 10 years.
• Every year the company's revenue growth must be at least 10%.
• The brand value and competitive edge of the company should be good.
That's it. An investor has to keep in mind the things above to build a Coffee Can Portfolio; however, investors who want detailed knowledge on the subject can also read the book Coffee Can Investing by Sourabh Mukherjee.
Disclaimer
Greynium Information Technologies and the Author do not encourage anyone to buy or sell any stocks and are not liable for any losses caused by decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.
